An Employer May Permanently Modify Employee "Workweeks" to Reduce Labor Costs

28 October 2012 Labor & Employment Law Perspectives Blog

The Fair Labor Standards Act (“FLSA”) requires an employer to compensate any employee who is not exempt from its provisions at a rate that is “not less than one and one-half times the regular” wage rate paid to the employee for all work time performed by the employee in excess of 40 hours (“overtime”) during the employee’s “workweek.”  The employer retains discretion under the FLSA to set employee “workweeks,” and “workweeks” can vary depending on an employee’s classification or employer requirements provided the “workweek” for each employee consists of a consecutive period of 168 hours.  How an employer schedules its employees to work during “workweeks” sometimes causes the employer to incur overtime liability that may be avoided were different “workweeks” established by the employer.  For example, an employer who regularly schedules a group of employees to work seven consecutive twelve hour shifts during a Tuesday through Monday “workweek” with seven consecutive days off will incur 44 hours of overtime liability for each employee. Were the employees “workweek” changed to a Sunday though Saturday “workweek,” the employer’s overtime liability will be reduced by 20 hours because 60 of the work hours will be performed Tuesday through Saturday of one “workweek” and the remaining 24 work hours will be performed on Sunday and Monday of the succeeding “workweek.”

Can an employer legally change employee “workweeks” to mitigate overtime liability?  The answer is “yes,” provided any modification of the “workweek” is permanently implemented in accordance with the FLSA implementing regulations.  See, e.g., Abshire v. Redland Energy Services, 11C, 8th Cir., No. 11-3380, October 10, 2012.

The plaintiffs in Abshire contended that the FLSA prohibited their employer from changing their “workweek” to mitigate its overtime liability. The Court rejected their contentions and ruled that the FLSA was not designed to “maximize the payment of overtime” to employees; that an employer may permissibly establish “workweeks” that minimize its overtime exposure; that an employer’s effort to reduce labor costs does not contravene the purpose of the FLSA; and permanently changing an employee’s “workweek” to achieve this outcome does not contravene the FLSA. 

Accordingly, an employer may permissibly implement modifications of employee “workweeks” to reduce or eliminate its labor costs without violating the FLSA provided these are intended to be permanent and are effectuated in accordance with FLSA regulatory requirements.  However, it is advisable that an employer consult with counsel before imposing changes to employee “workweeks” to ensure that changes comply with the FLSA (and any applicable state laws), and will not violate any contractual or bargaining obligations of the employer.

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